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  • Munstersrebel
    started a topic Financial state of (Foreign) Rugby competition

    Financial state of (Foreign) Rugby competition

    Neil Francis: Financial lunacy has pushed elite clubs close to extinction

    Some of the teams that were playing in both competitions should not be trading and these clubs and the league that they operate in are on the precipice.
    While I write this I am wearing my Webb Ellis-tinted glasses but it is indisputable that rugby is very good to this country and very good for it too. It is hard to quantify the galvanising effect a win in Dublin over England can have.
    Even a win against the French energises the people. We now have two provinces in the semi-finals of the Champions Cup. There isn't time to even bask in the glow of a win over England as the scramble begins for vantage for these huge matches. We do so oblivious to the fact that some of the teams that played last week cannot continue to trade for more than one or two seasons more.

    A couple of weeks ago we woke up to the news that a merger between Racing 92 and Stade Francais had been agreed - this was most unexpected. Chelsea and Arsenal or United and City putting their differences to one side, all for the good of a super club!
    The league, The TV mandarins, the Mayor of Paris and least/most (delete as appropriate) important of all, the players hadn't been informed or consulted. The job was a fait accompli. Player strikes and fan power forced the principals to change their minds and the deal was, eh, shelved. Hurrah!

    Read more here:

    Nobody asked why the merger was put together in the first place. The answer is obvious - it wasn't a merger, it was a rescue. Stade are a financial basket case. When Thomas Savare, the IT whizz and owner of Oberture PLC, bought the club from Max Guazzini - that is bought it before it went into liquidation and was demoted two divisions - Savare probably didn't realise what he had just done.

    Savare has had to pump €30m of his money into the club and he simply does not want to put any more in. Expenditure and the wage bill dwarfs its income and that income includes TV revenue streams from Canal Plus and Be-in Sport. The lunacy of exorbitant player salaries caught up with Stade five years ago but they carried on regardless.
    The truth is that if you want to be a sugar daddy you have to be a billionaire not a millionaire. I am not sure why Jacky Lorenzetti, Racing's billionaire owner, agreed to such a rescue; there cannot have been too many synergies, there would be too much bad blood about the deal. Stade play Bath in Paris in the semi-final and have a good chance of winning the Challenge Cup. If they win the cup they get a couple of hundred grand. A quarter of Sergio Parisse's salary. Unsustainable!


    Wasps brought an expensively-assembled ensemble to the Aviva. Kurtley Beale (above) on £800k for the season and Willie le Roux not far behind him. If Leinster had kept their shape and concentration, they could have put 50-plus on Wasps. They are top of their league table but who amongst you think that Saracens won't win the Aviva Premiership?

    Wasps were on the brink of extinction several years ago and people think that because a bit of rinky-dink financial engineering that they have magically made their troubles disappear.
    Wasps have subordinated debt of £43m on the back of a five-year bond on a coupon of about 5pc. They posted a loss of £3.8m for the last financial year but only because they exercised a £7m tax credit. That is €10.8m and this on the back of the fact that ticket sales were up 19pc and hospitality and sponsorship up 86pc. The Ricoh Arena has a casino, a hotel, a conference centre and numerous restaurants and pubs.

    It has even hosted Bruce Springsteen and Rihanna in concert. They can host God the Father, the Son, the Holy Spirit and Brian O'Driscoll in the Divine Barber Shop Quartet if they like but as long as their outgoings exceed their income, they are going to fall off a cliff.
    A debt pile of £43m secured on the stadium which is still at £48.5m. Another loss the size they had in 2016 and they will have their financial advisors looking to see what their banking covenants actually say. £800k for Kurtley?
    The team that will win the Premiership - Saracens - who play Munster in a fortnight are even in a more perilous state! They had a £45m hole in their balance sheet. It is hard to know how much they really lose on a per-annum basis.

    They got in trouble by undermining the RFU wage cap of £5.1m - by £9.8m to be exact. The cap goes up to £7m in 2017/'18 but Saracens could be beating that by at least 50pc again - big squads silly salaries and now in the soup.
    Nigel Wray, Saracens' owner, is nearly 70. How much longer is he going to guarantee their overdraft? His purchase on reality is also slipping somewhat and commenting on the salary cap recently he said: "We need to change the farce whereby we are all operating under different rules. We have one wage cap, the Irish provinces have no wage cap and the French clubs are twice ours - all of which makes no sense whatsoever, it needs to be changed."
    You are right Nigel, it does need to be changed but we are too far gone in some instances. Debt forgiveness for rugby clubs who spent too much money buying players - don't think so! The reason the Irish provinces don't have a wage cap is because they run their business in a prudent and responsible manner. The only issue they have here is trying to retain their players because clowns like you pay ridiculous amounts of money to try and take them. Needs to be changed to suit you Nigel?

    Nigel Wray will not live forever and when he goes I hope Saracens have a munificent benefactor who will continue to fund this lunacy. If not, they will fold. The RFU, I hope, have a contingency fund in place to buy all of their profligate clubs when the curtain comes down.
    This brings us on to Saracens' semi-final opponents Munster. There is about €9m still owed on Thomond and it appears that the IRFU have had to reschedule the debt on the back of a cash-flow deficit of €1.95m for year-end 2016. Munster have addressed these issues responsibly and whatever about the feel-good factor of being in the semis, the jump in crowd sizes means a big jump in revenues which won't be all spent on players' wages.
    The Welsh rugby union had to buy the Dragons last month; otherwise it would have folded. Munster, an IRFU entity, are not even close to that sort of a scenario.

    Mick Dawson keeps telling us that Leinster haven't a bob - I am sure there are one or two people somewhere in the province who believe him. Their Champions Cup semi-final opponents Clermont are, I believe, also in rude health financially. Good to see that the financially prudent also get represented at the top table. Enjoy the rugby folks - this will come to a halt in the next year or two!



    http://www.independent.ie/sport/rugb...-35598261.html

  • Waterfordlad
    replied
    Originally posted by jagawayagain View Post

    And to increase revenue - gates, marketing,etc.- it has little or nothing to do with the national team, and is entirely self interest.
    Fixed that for you

    Leave a comment:


  • jagawayagain
    replied
    Originally posted by Piquet View Post
    " But ask the big club owners and they all want the international game. It is not a question of them not wanting the international game.”

    The only reason that the Nigels "want the international game" is so that they can get paid for releasing their players.
    And to increase revenue - gates, marketing,etc.- it has little or nothing to do with the national team, and is almost entirely self interest.

    Leave a comment:


  • redherring
    replied
    He is essentially laying the blame at the PRL.... Quelle surpise?! Rugby has already gone down the route of football and unless there is significant financial restructuring the game is f*cked.

    Leave a comment:


  • Piquet
    replied
    " But ask the big club owners and they all want the international game. It is not a question of them not wanting the international game.”

    The only reason that the Nigels "want the international game" is so that they can get paid for releasing their players.

    Leave a comment:


  • i_like_cake
    replied
    Not sure where to put this.. but Pichot see the ruin of rugby approaching...

    One of rugby’s most senior officials has warned that the entire future of the international game is under threat unless urgent action is taken within the next 12 months

    Leave a comment:


  • the plastic paddy
    replied
    Couple of interesting developments. BT has just got rid of a couple of the more prominent supporters of their spending on sports rights and replaced them with considerably more cautious alternatives. And Saracens are complaining about wage inflation compromising their ability to retain players. Hopefully that indicates that Johan Rupert has had enough of throwing money at a loss making organisation and is thinking about pulling the plug, especially if they have to take a hit on their TV money.


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  • Munsterboy
    replied
    Originally posted by Munstersrebel View Post
    How will they fund 4 more teams? I have read that NzAu dont want to keep paying the maddive airfares and accommodation to play SA teams. So Saru would look at Europe but I can't imagine European teams wanting to shell out fortunes to fly 40+ people to South Africa...
    If they bring enough TV and sponsorship money they'll be of interest to the Pro12. That will more than offset travel costs.

    Leave a comment:


  • Munstersrebel
    replied
    How will they fund 4 more teams? I have read that NzAu dont want to keep paying the massive airfares and accommodation to play SA teams. So Saru would look at Europe but I can't imagine European teams wanting to shell out fortunes to fly 40+ people to South Africa...
    Last edited by Munstersrebel; 17th-April-2017, 16:36.

    Leave a comment:


  • rathbaner
    replied
    Update on the thinking in South African rugby, four professional SA teams who "may not be playing in SANZAAR".

    8 pro teams, not 14, in SARU's future

    by Brenden Nel 13 April 2017, 08:20

    South African rugby is likely to comprise of eight professional teams in future, with the rest being semi-pro or amateur, if the big changes proposed to the structure of SARU are undertaken.
    The eight teams – four in Vodacom Super Rugby, and four in a possible competition in a new market, backed up by a strong Currie Cup competition based on strength vs strength are part of the radical changes being proposed to SARU’s structures in future to streamline the game and bring rugby into a sustainable future.
    It is clear the current structures aren’t working and despite the outcry over the axing of two Super Rugby teams this week, results underline SARU’s contention that the economy of the game at the moment can only support four franchises in the competition.
    But while the pain of being excluded from Super Rugby is a bitter pill to swallow, SARU are busy with plans to find a new home for the two axed teams, as well as a new competition where four professional sides can support their Super Rugby allies in a second-tier competition that would see new markets being explored.
    SARU CEO told journalists this week that with the advent of the global season being finalised by World Rugby, it now meant that SARU could well look to new markets for new competitions. But this would mean taking some tough decsisions in the interests of SA Rugby.
    “It is high time we take tough decisions in the interests of SA Rugby,” Jurie Roux said.
    “It is high time we acknowledge we have a responsibility to take those tough decisions. This is what we as staff are paid for and certainly what people are elected for. This is the right time to make these decisions. Will people be angry? Yes they will be angry, will people be disappointed? Yes, they will be disappointed. My job is to get past that decision and then my next job is to find them somewhere else to play. Up until now that was impossible, given the decisions on the global season that has not been sorted.
    “There has been a pact between the southern and northern hemisphere not to do any deals until that has been sorted. The global season has been sorted until 2032, we know every nation we will play against until 2032.
    “We always have to allow for different competitions and now for the first time we are being approached by different entities for us to play.”
    Roux said that in an ideal world SARU would have eight professional teams and this is the direction the national body is moving in.
    “ In an ideal world we would probably have eight professional teams playing in different competitions in the world and then you would still have your 14 unions playing in the other competitions on a semi-professional basis. I’ve been advocating this since 2011 and it is high time that people listen to it.
    Read more here
    © supersport.com

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  • Munsterboy
    replied
    Leicester should resist the temptation to join the race to the bottom. They're in no danger of being relegated and, while they may not win anything for a few years, they are far better positioned for survival and success in the long run.

    The more responsibly run teams could start talking to us about breaking away and starting a new B&I league without the spivs...

    Leave a comment:


  • Point
    replied
    Originally posted by Mule
    Nigel Wray, Saracens' owner, is nearly 70. How much longer is he going to guarantee their overdraft?
    Francis had a good topic to discuss, but it was a scattergun piece. Nigel Wray must be concerned about his future on this planet, if he was to read Franno's piece.

    Leave a comment:


  • the plastic paddy
    replied
    "Several" teams turn a profit. Now several can be six, it can also be 2, which would be my estimate of the number of English teams that will turn a profit this season.


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  • rathbaner
    replied
    An article in today's Daily Torygraph is saying that the EPL clubs have never had it so good with attendance records through the roof and everyone making handsome profits thatnks to the salary cap.

    Leave a comment:


  • the plastic paddy
    replied
    Originally posted by Piquet View Post
    But if all clubs agree to it and agree that there are penalties for breaching it why is it legally vulnerable ?
    They don't all agree to it, hence Wray threatening court action. It is a complete nonsense.


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